The federal prosecutor’s office on Tuesday added new bank fraud charges against him and prominent real estate investor Victor Makras to the corruption case against former top San Francisco public utility official Harlan Kelly.

The new charges came from a $ 1.3 million real estate loan that Kelly, the former general manager of the San Francisco Public Utilities Commission, allegedly secured from a company called Quicken Loans, according to prosecutors.

Prosecutors say Kelly and Makras conspired to defraud the company by agreeing to falsely increase the amount Kelly Makras owed on a previous loan. This enabled Kelly to get more money from Quicken Loans at a lower interest rate.

Kelly then allegedly used the funding to pay off other debts.

The charges are part of a wider FBI investigation into corruption in San Francisco City Hall.

This is the second round of charges against Kelly and the first against Makras. Makras is the director of Makras Real Estate and has served on various boards including the Port Commission and the Public Utilities Commission.

Kelly was first implicated in the scandal last November when US prosecutors charged him with fraud on allegedly taking bribes from businessman and license accelerator Walter Wong.

In the earlier complaint, prosecutors said Wong paid Kelly and his wife, former city manager Naomi Kelly, to take a vacation to China in 2016.

In return, Harlan Kelly allegedly used his position to help Wong land a lucrative contract to modernize the city’s streetlights. While Wong ultimately didn’t win the contract, prosecutors said Kelly smoothed the bidding process for him.

These allegations are based in part on statements Wong made to federal authorities. He agreed to join the investigation when he pleaded guilty of fraud and money laundering in July 2020.

Both Kelly and his wife have since resigned, pleading their innocence. Naomi Kelly was not charged.

“Harlan Kelly is loved by his family, respected by our community, admired by his peers, and has served as a loyal civil servant,” wrote attorney Brian Getz in an email to The Examiner. “He has not committed any crimes.”

A Makras attorney did not immediately respond to a request for comment.

Kelly is on trial today. Wednesday mornings. A date for the appearance of makras has not been set.

mbarba@sfexaminer.com

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June 2, 2021

wolterke – stock.adobe.com

Wells Fargo CEO Charlie Scharf said Wednesday that the bank, including its wealth management business, is now on the offensive after “the aftermath” of bad press over the company’s banking scandals with fake consumer accounts subsided.

“We were extremely distracted as a company,” said Scharf at the Bernstein 37th Annual Strategic Decisions Conference. If you look at everyone who works “day in and day out with customers”, “they weren’t really offended in any way, shape or form”.

“It was a defense,” said Scharf, who took over as CEO in October 2019, adding that the company will “nudge” its path to focus on growth rather than addressing the problems of the past.

Scharf’s remarks come a week before the first face-to-face meeting of the Wells Fargo Operations Committee, which the bank chief put together last year primarily through the hiring of 10 of his 18 members from other companies. They’re also coming because Wells’ Wealth and Investment Management department has undergone a multi-year reorganization that has created uncertainty among some executives in the field.

But Scharf has been shining the spotlight on the San Francisco Bank’s wealth management business over the past few weeks, giving some pointers to the company’s strategy at a conference in May when he said he expected the business to be better off the high net worth Mass customers can capitalize on the consumer base.

“We have people in the consumer banks who are wealthy, not very wealthy, but wealthy and have considerable sums of money to invest, and we just haven’t used the wealth we have,” Scharf told an online audience on May 19 at the Wells Fargo Financial Services Investor Conference, as per the transcript from Sentieo, a finance and corporate research platform.

Wells Fargo’s competitors have embraced this type of proprietary brokerage opportunity and “done so well,” added Scharf.

Scharf did not identify competitors by name, but his bank’s own wirehouse competitors have been promoting closer ties between banks and brokers for years.

For years, executives at Bank of America and its subsidiary Merrill Lynch have emphasized the profitability of cross-selling banking and wealth management clients. Merrill President Andrew Sieg recently promoted the parent bank’s client acquisition pool, identifying more than 3 million Bank of America clients with net worth in excess of $ 1 million, more than three times his brokerage firm’s 850,000 existing clients.

Prior to the Wells fake account scandal in 2016, the company had also pushed for more cross-selling between its businesses, but it stopped reporting the number of banking products per wealth customer in its quarterly results to keep the wealth business out of the aftermath and Aggression to distance sales culture.

However, these ghosts still haunt the company. During Scharf’s conversation on May 19, an analyst noticed that Scharf had not used the word “cross-selling” specifically and asked, “I was just wondering if there is any sensitivity to it?”

“Yes and no,” replied Scharf, noting that the strategy with “the right controls” made sense.

“This is not about cross-selling. It’s not about setting the necessary goals or numbers, ”said Scharf. “We have a limited but important range of products, and the point is to adequately serve customers in each of these areas.”

Sure, some of the cleanup is still going on, even after Wells Fargo reached $ 3 million with state regulators last year to resolve some of the cross-sell claims.

Wells Fargo terminated several former bank-based advisors this year after conducting a review of decades of insurance sales and discovering that they had mistakenly received referral credits for policies that were canceled shortly after they were issued.

It is also still in the process of shutting down its international wealth business and expanding its sales force, which has declined by nearly 2,000 net from 15,086 to 13,277 (including several hundred private bankers and banking advisors who joined late last year).

As a sign of health, Scharf reported on Wednesday that Wells Fargo increased its forecast for revenue-related spending for 2021 from $ 500 million to $ 900 million, based largely on asset management costs – specifically brokerage commissions. The cost increases are “a good thing,” added Scharf quickly, “because our revenues are higher and we like the margins and returns in our asset management business.”

He also said Wells Fargo will “roll out a new mobile application” by early 2022.

A Wells Fargo spokesman had no answer at press time when asked if the new mobile application tools would be available to wealth management firms, but said the broker accounts had been built into previous versions of such tools.

-Mason Braswell contributed to this story.

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Florence Kong

SAN FRANCISCO (AP) – A millionaire who admitted bribing the city’s public works director with gifts that included a $ 36,550 Rolex watch in gold turned a year and day on Thursday Federal prison sentenced.

Florence Kong was also convicted of paying a $ 95,000 fine for bribing an officer and making false statements to the FBI.

Kong, 63, is one of nearly a dozen people charged with an extensive corruption investigation at City Hall. Several city department heads had to resign.

Kong admitted bribing Mohammed Nuru, the former director of the city’s public works department, who resigned after being charged with fraud and lied to the FBI. Prosecutors claim he took thousands of dollars in gifts and cash from contractors. They also claimed he teamed up with a restaurateur in 2018 to bribe an airport inspector for top-notch restaurants at San Francisco International Airport.

“Both corrupt officials and those who corrupt them are responsible for their crimes. Our town hall prosecution is ongoing. The investigation continues,” said David L. Anderson, US attorney for the Northern District of California.

In a informed consent form last year, Kong admitted that she bribed Nuru in exchange for running the business of her company SFR Recovery, Inc., which had contracts with the city and county to dispose of rubble.

Prosecutors said that in addition to the clock, Kong Nuru provided expensive meals, an envelope with cash for his daughter at her graduation ceremony, and work on his vacation home.

“Kong admitted that she believed Nuru was one of the most powerful officials in San Francisco,” and “had a tremendous influence” on government contracts and permits, the US law firm said.

She also admitted lying to FBI agents about her connections with Nuru.

Kong is one of at least 10 people charged with corruption at City Hall. These include contractors and former head of the Public Utilities Commission, Harlan Kelly.

Kelly has denied wrongdoing but resigned from his position last year.

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